The Phoenix Effect: The Creative Challenge

In this chapter, we analyze “the creative challenge” confronting established organizations, especially in terms of how they navigate disruption. Following the same pedagogical approach as the previous chapter, we use a case to describe the strategic leadership interventions required to transition the business model from a mature industry into a new lifecycle. We discuss the dichotomy between causal and effectual business logic—traditional strategic planning versus entrepreneurial experimentation—and how established organizations often struggle to adopt the latter. We provide details of the three stages of the creative challenge: awakening, experimentation, and transformation. Each stage is critical for radical innovation, necessitating a dynamic interplay between elaborating systemic losses, embracing trial and error, and evolving organizational structures.